This matter is before the court on the Debtors’ Motion for Order Avoiding Lien on
Exempt Property seeking to avoid the lien of creditor Homecomings Financial (“Debtors’
Motion”). An Objection to the Debtors’ Motion was filed by US Bank, National Association (“US
Bank”), although there is nothing in the record to indicate that US Bank is a successor entity to
Homecomings Financial.

The Debtors filed their Chapter 7 case in this court on October 16, 2008, listing their
residence as an asset. Two mortgages encumbered that property, a first mortgage held by
CCO Mortgage in the initial amount of $128,000.00, and a second mortgage held by
Homecomings Financial in the amount of $23,000.00. The value of the property was
$125,000.00. The amount owed to CCO Mortgage at the time of filing was $125,900.00 and
the amount due to Homecomings Financial was $22,700.00. It is undisputed that the amount of
the first mortgage exceeds the value of the property.

The Debtors contend that Homecomings Financial’s lien is wholly unsecured and
therefore void pursuant to Bankruptcy Code sections 506(a) and (d), which provide in pertinent
part as follows:

(a)(1) An allowed claim of a creditor secured by a lien on property in which the
estate has an interest, . . ., is a secured claim to the extent of the value of such
creditor’s interest in the estate’s interest in such property, . . ., and is an
unsecured claim to the extent that the value of such creditor’s interest . . . is less
than the amount of such allowed claim. Such value shall be determined in light
of the purpose of the valuation and of the proposed disposition or use of such
property . . .

. . . .

(d) To the extent that a lien secures a claim against the debtor that is not an
allowed secured claim, such a claim is void, unless–

(1) such claim was disallowed only under section 502(b)(5) or 502(e) of this
title; or

(2) such claim is not an allowed secured claim due only to the failure of any
entity to file a proof of claim under section 501 of this title.

11 U.S.C. §§ 506(a)and(d). The Debtors acknowledge that under the rationale of Dewsnup v.
Timm, 502 U.S. 410, 112 S.Ct. 773 (1992) it is not possible to strip down a consensual lien.
They argue, however, that the court should consider a minority position holding that when a
junior lien is wholly unsecured, as here, that lien can be “stripped off,” as opposed to being
“stripped down” pursuant to section 506(d).

The Debtors cite In re Yi, 219 B.R. 394 (Bankr. E.D. Va. 1998) in support of their
position. There the court ruled that a wholly unsecured lien can be avoided under section
506(d). In Ryan v. Homecomings Fin. Network, 253 F.3d 778 (4th Cir. 2001), however, the
court held that an allowed unsecured consensual lien may not be stripped off in a Chapter 7
case, effectively overruling Yi. Id. at 783. Further, in Talbert v. City Mortgage Servs. (In re
Talbert), 344 F.3d 555 (6th Cir. 2003), the court agreed with the conclusion in Ryan, stating, “[A]
Chapter 7 debtor may not use 11 U.S.C. § 506 to ‘strip off’ an allowed junior lien where the
senior lien exceeds the fair market value of the real property.” Id. at 562.

In view of these holdings, it is clear that the Debtors may not prevail on their Motion, and
it is therefore hereby ordered that the Debtors’ Motion for Order Avoiding Lien on Exempt
Property is overruled.